Spirit Airlines said today that it has filed for bankruptcy protection and will attempt to reboot as it struggles to recover from the pandemic-caused swoon in travel and a failed attempt to sell the airline to JetBlue, the Associated Press reports. The biggest U.S. budget airline, Spirit has lost more than $2.5 billion since the start of 2020 and faces looming debt payments totaling more than $1 billion over the next year.
Spirit said it expects to operate as normal as it works its way through a prearranged Chapter 11 bankruptcy process and that customers can continue to book and fly without interruption. All tickets, credits, and loyalty points remain valid, the airline said, as are affiliated credit cards and other membership perks. Milwaukee Mitchell International Airport is the only airport in Wisconsin from which Spirit flies.
Spirit failed to return to profitability when the coronavirus pandemic eased and travel rebounded. There are several reasons behind the slump, including:
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In the first six months of this year, Spirit passengers flew 2% more than they did in the same period last year but paid 10% less per mile, and revenue per mile from fares is down nearly 20%;
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Spirit’s costs, especially for labor, have risen;
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The biggest U.S. airlines have snagged some of Spirit’s budget-conscious customers by offering their own brand of bare-bones tickets;
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Fares for U.S. leisure travel — Spirit’s core business — have sagged because of a glut of new flights; and
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The premium end of the air-travel market has surged while Spirit’s traditional no-frills end has stagnated.
In a highly unusual move, Spirit plans to cut its October–December schedule by nearly 20%, compared with the same period last year, which analysts say should help prop up fares, but will help rivals more than it will boost Spirit.
